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Bank towers are shown from Bay Street in Toronto's financial district.Adrien Veczan/The Canadian Press

Shareholders at Canada’s five largest banks resoundingly rejected an activist campaign asking each lender to hold an annual “say-on-climate” vote, with Toronto-Dominion Bank’s TD-T investors the latest to thwart the effort.

The country’s five largest lenders all held their annual general meetings over the past two weeks, and this year there was a concerted push from activists, particularly from Mouvement d’éducation et de défense des actionnaires, known as Médac, to require them to hold regular advisory votes on environmental policy and targets.

If the proposals were approved, the climate votes would be similar to annual say-on-pay votes that many large corporations now routinely hold, giving investors an opportunity to publicly voice any displeasure with executive compensation.

However, the say-on-climate proposals need the support of a majority of shareholders who vote at each bank’s meeting, and on average, about 80 per cent of each bank’s shareholders rejected them this year, including at TD’s meeting on Thursday.

Many institutional shareholders have already adopted environmental, social and governance (ESG) principles into their investing criteria, which has forced banks to consider how to make their businesses more environmentally friendly.

Although the activists’ proposal was shot down, their environmental concerns dominated the question and answer portion of TD’s annual meeting, forcing chief executive officer Bharat Masrani to repeatedly walk the tightrope of supporting a net-zero future, while also advocating for an orderly transition that will require fossil fuels to be burned for the foreseeable future.

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Getting to net-zero emissions is crucial, Mr. Masrani said, but “in the meantime there is a transition required. There is no way we can flip a switch and get there.”

He added that during this transition, “continued supply of responsible energy is necessary,” making the case that Canadian energy belongs in this category.

Royal Bank of Canada’s RY-T CEO made similar arguments at the lender’s own annual meeting last week. Facing ardent opposition from climate advocates who criticized RBC’s financing of fossil fuel development and infrastructure, including the Coastal GasLink pipeline that is currently under construction, CEO Dave McKay repeatedly made his case that the climate transition “has to be an orderly journey.”

Mr. McKay also argued there should be an emphasis from climate advocates on reducing emissions over time, not a singular focus on banks who finance energy sources.

Aside from climate, TD’s CEO used his annual meeting speech to weigh in on Ottawa’s recent budget – something the banks paid close attention to because of the Liberals’ proposal to implement two new taxes on banks and life insurers.

In addition to criticizing the new measures, saying they are “not good tax policy and could lead to unintended consequences,” Mr. Masrani stressed the need for governments “to reduce deficits built up during the pandemic and focus on growth.”

Mr. Masrani argued that less debt would provide Ottawa “with levers and options should they need to respond to any future crisis. We cannot face the next crisis with limited means to address it. This matters, because there are already numerous issues before us that require our attention.”

A number of business leaders have pressed Ottawa to focus on economic growth in recent weeks, but many of the public calls have lacked specifics on how to do just that. Mr. Masrani offered some tangible examples, such as developing new manufacturing and production capabilities, because they could help taper long-term inflation and maintain the flow of consumer goods and other products, including personal protective equipment and vaccines.

He also advocated for investing in and enhancing Canada’s health care system “so that we are prepared should another health emergency impact us in the future.”

With reports from James Bradshaw and Jeff Jones

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